The Economist Intelligence Unit (EIU) has predicted that the Ghana Cedi will hit GHS6.50 to US$1 by 2023.
This was contained in EIU’s country report on Ghana which was released on 13 May 2019.
According to data from Bloomberg, the cedi has fallen by 7.3% as of Thursday, 16 May 2019.
The cedi hit an all-time low on 12 March 2019 ending at GHS5.8 to US$1.
This was as a result of seasonal changes and high volumes of dollar repatriation from the country.
Federal rate hikes by the US also took a toll on the country’s currency due to high foreign investments.
In his briefing notes, the editor of the EIU report, Nathan Hayes, stated that: “The cedi will remain prone to periods of volatility, given the ongoing domestic economic weakness of a high dependence on commodity prices. From an average of GHS4.58: US$1 in 2018, the currency will weaken to GHS6.50: US$1 in 2023”.
The EIU said it now expects the cedi to average GHS5.31 to US$1 in 2019, from GHS5.20 to US$1 previously, with depreciation driven by the government’s fiscal position, together with the large current account deficit and increased political uncertainty before the 2020 elections.
“We have revised down our inflation forecast for 2019, to 9.6% from 10.9% previously, as the broader downward trend in inflation from its 2016 highs continues and as the higher base effects from 2018 temper the growth rate more than we previously envisaged,” the report added.
On the other economic indices, the EIU forecasts that the current account will shift from an estimated deficit of 1.8% of GDP in 2018 to a surplus of 1.1% of GDP by 2023, owing to rising oil exports over the forecast period.
The report said rising oil and gas production will support real GDP growth in the 2019-23 forecast period.
“The government’s industrialisation push and moves to strengthen the banking sector will benefit non-oil economic growth, although credit is still relatively scarce. Inflation will remain high in 2019, at a forecast average of 9.6%, given a weakening currency and strong growth in private consumption. The rate will remain close to the upper bound of the official 6-10% target range in 2020-23, for similar reasons.